By: Strama H.B. No. 3532
A BILL TO BE ENTITLED
AN ACT
relating to the creation of a competitive solar schools incentive
program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 39.002, Utilities Code, is amended to
read as follows:
Sec. 39.002. APPLICABILITY. This chapter, other than
Sections 39.155, 39.157(e), 39.203, 39.903, 39.904, 39.9051,
39.9052, [and] 39.914(e), and 39.9156, does not apply to a
municipally owned utility or an electric cooperative. Sections
39.157(e), 39.203, and 39.904, however, apply only to a municipally
owned utility or an electric cooperative that is offering customer
choice. If there is a conflict between the specific provisions of
this chapter and any other provisions of this title, except for
Chapters 40 and 41, the provisions of this chapter control.
SECTION 2. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.9155 to read as follows:
Sec. 39.9155. SOLAR SCHOOLS INCENTIVE PROGRAM. (a) In this
section:
(1) "Distributed solar generation" means distributed
renewable generation, as defined by Section 39.916, using an
energy source derived directly from the sun.
(2) "Low-income electric customer" has the meaning
assigned by Section 39.903(l).
(3) "Owner of distributed solar generation" includes
a school district who contracts with another person to install or
maintain distributed solar generation on the school district's
side of the meter, regardless of whether the school district takes
ownership of the installed distributed solar generation.
(4) "Rated watts" means the output of a solar energy
device as specified by the manufacturer of the device expressed in
watts of direct current.
(5) "School district" has the meaning assigned by
Section 21.201, Education Code.
(b) The program developed under this section applies only to
an electric utility operating inside or outside of ERCOT.
(c) The commission shall develop and implement a program as
provided by this section to increase the amount of distributed
solar generation installed on property owned by school districts
within the state. The program must apply statewide and must be
designed to be transparent, cost-effective, and limited in scope.
The commission shall act as program administrator to oversee and
administer the implementation of the program.
(d) The solar schools incentive fund is established as a
special trust fund held by the comptroller outside of the state
treasury and administered by the program administrator for the
payment of the incentives authorized by this section, without the
necessity of an appropriation. Money in the fund may be used only
for the purposes of the program as provided by this section. The
fund consists of:
(1) fees imposed under this section and remitted to
the comptroller for deposit to the credit of the fund;
(2) gifts or grants awarded for the purposes of the
program and deposited to the credit of the fund; and
(3) interest and other income from investment of the
money deposited to the credit of the fund.
(e) The commission by rule shall provide for:
(1) the assessment and collection of nonbypassable
fees by electric utilities and transmission and distribution
utilities. An electric utility or transmission and distribution
utility shall remit all fees collected to the comptroller for
deposit to the credit of the solar schools incentive fund. The fees
assessed under this subsection must be in the following amounts:
(A) $0.00028 per kilowatt hour for each
residential or commercial meter which, if applicable, must be
included in nonbypassable delivery charges paid by the customer's
retail electric provider; and
(B) $20 each month for each industrial meter,
except that the total of nonbypassable fees assessed against a
single industrial account may not exceed $200 in a single month.
(2) incentives to defray the cost of installing
distributed solar generation on property owned by school districts
in Texas. These incentives shall be distributed according to the
provisions outlined in (g) of this section. The commission shall
ensure that:
(A) the schedule for payment of these incentives
does not obligate payment of incentives in amounts that would cause
the incentive payments to exceed the amount budgeted for incentive
payments over the duration of the program; and
(B) provides for incentives to be paid directly
to school districts, qualified installers, or third-party owners of
installed solar generation in a simple, uniform, and reliable
administrative manner that:
(i) ensures the timely payment of
incentives; and
(ii) allows for the assignment of the
incentive to another person at the direction of the qualified
recipient.
(f) Unless this program is extended by the Legislature,
electric utilities may not assess the fees authorized by this
section after the fifth anniversary of the date the program
required by this section is established by commission rule. Each
biennium, the commission shall report to the legislature on the
progress of the program. This report may include recommendations
on how the program can be modified to increase the deployment of
distributed solar generation on public schools in Texas. For each
biennium in which the program is scheduled to terminate, the report
shall include a recommendation on whether or not the Legislature
should extend the program.
(g) The commission shall distribute the incentives mandated
in (e) by administering quarterly reverse auctions, beginning as
soon as practicable, and continuing for 20 quarters.
(1) The total value of the incentives available in
each auction will be determined by the commission based upon
projected funding availability and the number of remaining
quarters, allowing for a reasonable margin of error for the
conversion to production based incentives according to Subsection
(i). The commission may set the total quarterly incentive value in
terms of either cost or capacity.
(2) Participants in each reverse auction will submit
bids to receive incentives to install distributed solar generation
technology on property owned by school districts in Texas. Each bid
will include a price component, expressed in dollars per installed
watt, and a volume component, expressed in terms of the total
installed capacity of the proposed project measured in rated watts.
(3) Only qualified bids will be eligible for
participation in the reverse auction. Bids will be considered
qualified if:
(A) they can demonstrate the ability to finance
the remainder of the cost of the distributed solar project. The
commission may establish specific procedures and guidelines for
this requirement;
(B) they make a deposit equal to 5 percent of the
total value of the bid. This deposit shall be refunded for bids
that are not accepted. The deposits for bids that are accepted are
non-refundable; and
(C) they meet any other requirements that the
commission deems necessary for the successful implementation of
this program.
(4) The commission will create a bid stack by ordering
the bids from lowest to highest according to the dollar per watt
price component of each bid. The commission will accept bids from
the bid stack, from lowest to highest, until the limit determined
in (1) has been reached. The price component of the highest bid
accepted will set the quarterly incentive clearing price for that
quarter, and the bidders of all accepted bids shall receive the
quarterly incentive clearing price for the full volume of their
accepted bid.
(5) No bid will be accepted by the commission that
exceeds the bid price cap for that quarter. The bid price cap for
each quarter will be set according to the lesser of:
(A) $1.50 per rated watt; or,
(B) the quarterly incentive clearing price from
the previous quarter.
(6) Any funding that is still available according to
(1) after the quarterly reverse auction shall be made available in
the form of nonparticipating incentives on a first come first serve
basis. Any entity that is eligible to participate in the quarterly
reverse auctions may apply for a nonparticipating incentive. The
dollar per watt value of nonparticipating incentives for each
quarter will be set at 90% of the quarterly incentive clearing price
for that quarter.
(7) Any funding that is still available at the end of
each quarter shall be rolled forward, divided evenly between the
remaining quarters.
(h) If program funds are rolled forward at the end of
consecutive quarters, the commission may consider the following
measures. The commission should implement one or more of these
measures if the commission determines that it will increase the
deployment of distributed solar generation technology on property
owned by school districts in Texas:
(1) Expanding program eligibility to include
community colleges located in Texas;
(2) diverting program dollars to outreach programs
intended to increase program participation;
(3) conducting or commissioning a study on the
available capacity and optimal locations for the installation of
distributed solar generation technology on educational facilities
in the state of Texas; and
(4) increasing the bid price cap. The commission
should only consider increasing the bid price cap if 25% or more of
the funds allotted to each quarter go unused for two or more
consecutive quarters.
(i) The incentives provided in (e) will take the form of a
production-based incentive.
(1) Incentives will be disbursed in quarterly payments
over a three year term based upon a payment per unit of electricity
produced.
(2) The commission will establish the payment per unit
of solar electricity produced by converting the quarterly incentive
clearing price and the nonparticipating incentive price from a
capacity incentive price to a production incentive price. In
making this conversion the commission should consider a reasonable
production factor that, if a system produced at exactly that rate,
the market clearing price for that system's auction would be
reached at the conclusion of the three year term, accounting for an
appropriate discount rate.
(3) Winning bidders must interconnect within 6
quarters of the quarter in which their bid was accepted. If the
project fails to interconnect within this time, the incentive claim
is rescinded, and that capacity returns to the program fund, unless
the winning bidder opts for a one-time extension of their bid at the
nonparticipating incentive level.
(4) The 12 quarters during which a winning project may
claim its incentives can begin as soon as the project owner files to
claim their incentives, but in no case shall the first of those 12
quarters be later than the 4th quarter after the acceptance of
their bid or their one time extension. Projects that connect during
the 5th or 6th quarter may still claim their remaining incentives in
subsequent quarters, but the incentives for lost quarters cannot be
recovered.
(j) Notwithstanding any other provision of this title, a
retail electric provider or any other person may own distributed
renewable generation and enter into a contract with the school
district on whose property the generation is located to lease the
generation or sell the output to a retail customer or to a
customer's retail electric provider. The owner of the generation
is not an electric utility and is not required to register with the
commission as a power generation company or self generator unless
the commission determines that such registration is necessary to
maintain the reliability of the distribution grid. The commission
may establish appropriate reporting requirements for trading
renewable energy credits. An area of this state in which a
distributed renewable generation owner sells output as provided by
this subsection is not considered an area in which customer choice
has been introduced.
(k) The commission by rule shall provide a method by which a
retail electric provider and a transmission and distribution
utility shall use money collected by nonbypassable fees imposed in
accordance with rules adopted under Subsection (e) to credit the
electric service bill of a low-income electric customer for an
amount equal to the customer's share of the fee, based on the
customer's electric energy consumption during the billing period.
SECTION 3. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.9156 to read as follows:
Sec. 39.9156. SOLAR SCHOOLS PROGRAMS; MUNICIPALLY OWNED
UTILITIES AND COOPERATIVES. (a) It is the goal of the legislature
that:
(1) electric cooperatives and municipally owned
utilities administer incentive programs that increase the amount of
distributed solar generation installed on property owned by school
districts in this state in a cost-effective, market-neutral, and
nondiscriminatory manner;
(2) customers of electric cooperatives and
municipally owned utilities have access to incentives for the
installation of distributed solar generation on property owned by
school districts; and
(3) electric cooperatives and municipally owned
utilities spend money to increase the amount of distributed solar
generation at a total funding level consistent with the
requirements for electric utilities in this state under Sections
39.9155(e)(1).
(b) This section applies only to an electric cooperative or
municipally owned utility with retail sales of more than 500,000
megawatt hours in 2007.
(c) Beginning not later than September 1, 2014, a
municipally owned utility or electric cooperative must report
annually to the state energy conservation office, in a form and
manner determined by the office, information regarding the efforts
of the municipally owned utility or electric cooperative related to
this section.
(d) This section does not prevent the governing body of an
electric cooperative or municipally owned utility from adopting
rules, programs, or incentives to encourage or provide for the
installation of more solar generation capacity than the goal
established by Subsection (a)(3).
(e) An electric cooperative or municipally owned utility
may recover the costs required by this section through a
nonbypassable fee consistent with that authorized by the commission
for electric utilities under Section 39.9155(e)(1) or another cost
recovery mechanism as determined by the governing body of the
electric cooperative or municipally owned utility.
(f) An electric cooperative or municipally owned utility
may waive the requirements of this section by opting into the solar
schools incentive program in Section 39.9155. Any electric
cooperative or municipally owned utility that chooses to opt in to
the incentive program in 39.9155 may propose an alternate revenue
structure to that outlined in 39.9155(e)(1). The commission will
accept any proposed revenue structures which it determines will
likely provide an equal or greater level of revenues that would
have been provided by the structure outlined in 39.9155(e)(1). Any
electric cooperative or municipally owned utility that chooses to
opt in to the statewide incentive program in 39.9155 will not, as a
result, be entered into the deregulated electricity market, nor
will the commission gain any additional powers with regard to the
electric cooperative or municipally owned utility other than those
required to administer this program. Any additional powers assumed
by the commission in this regard will be construed narrowly, and
will dissolve at the end of the program or upon the withdrawal of
the electric cooperative or the municipally owned utility from the
program. The commission will determine an equitable method for
withdrawal from the program by an electric cooperative or
municipally owned utility that has opted in, but in no
circumstances will the withdrawal affect the incentives of winning
bidders, whether those bidders have interconnected or not.
SECTION 4. Section 39.914, Utilities Code, is repealed and
replaced with the following:
Sec. 39.914. CREDIT FOR SURPLUS SOLAR DISTRIBUTED RENEWABLE
GENERATION BY PUBLIC SCHOOLS.
(a) The commission shall require that:
(1) a retail electric provider offer service to a
school district that has distributed renewable generation
equipment installed on the district's property; and
(2) a retail electric provider that provides service
to a school district that has distributed renewable generation
equipment installed on the district's property:
(A) purchase from the school district the surplus
electricity generated by distributed renewable generation
installed on the district's property at a price equal to or greater
than a fair market price; or
(B) credit the school district's electric
services bill for the billing cycle in which the surplus
electricity is generated by distributed renewable generation
installed on the district's property at a price equal to or greater
than the equivalent of a fair market price determined in accordance
with this section and allow any unused credit on the school
district's bill to be carried forward to subsequent billing cycles
for the district; and
(b) The commission shall develop appropriate net metering
policies and retail rate options for school districts served by
electric utilities outside the Electric Reliability Council of
Texas.
SECTION 5. The Public Utility Commission of Texas shall
adopt rules establishing the programs required under Sections
39.914, 39.9155 and 39.9156, Utilities Code, as added by this Act,
as soon as practicable.
SECTION 6. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.